1. New product development
Chapter 12
New product development

2. New product development
1. Introduction
2. Product strategy
3. Classification of new products
Some explanations for high failure rates
Macro problems associated with NPD
6. Organisational activities involved in NPD
7. Summary & recap

3. Macro view of new product development
Macro environment
Competition, finance, economic conditions, legal framework
New ideas,
suggestions,
concepts
New products
and services
The organisation ?
How does this process work

4. Key themes from the product development literature
Process
timing
pre-development activities
development activities
marketing activities
launch activities
Organisational
structure
mechanism
style
Management
authority
support
technical aspects
communication
People
multifunctional
co-ordination
product champion
communication
Information
general
marketing
external
communication
Successful
new products
Strategy
orientation
objectives
synergy
product characteristics
Source: Hart (1995) in Bruce & Biemans, Wiley; Trott (2005), Prentice Hall

5. Ansoff’s directional policy matrix
Current
products
New
products
Current
markets
3. Product
development
strategy
1. Market
penetration
strategy
2. Market
development
strategy
4. Diversification
strategy
New
markets
Source: Ansoff, 1968

6. A product is multi-dimensional
Brand name
Features
Quality
specifications
price
Packaging
Level of
service
Technology

7. Change a dimension and you have a new product
Brand name
Features
Quality
specifications
Price
Level of
service
Packaging
Technology

8. Classification of new products
New to the world products
"New to the firm" products
Product line additions
Product improvements
Repositionings
Source: Booz, Allen & Hamilton, 1982Fa

9. Some explanations for high failure rates
Market too small
Poor match for company
Not new or different
Poor positioning or misunderstanding of customer needs
Inadequate support from channel
Competitive response
Changes in consumer taste
Changes in wider environment
Insufficient return of investment
Internal organisational problems

10. Macro considerations in new product development
Shortage of important new product ideas
Fragmented markets
Social and governmental constraints
Costliness of the new product development process
Capital shortage
Shortened time span to completion
Shorter life spans for successful products
Source: Kotler, 2000

11. Organisational activities involved in NPD
Generation of new product concepts
Idea screening
Concept testing
Prototype development
Test marketing
National marketing

12. Functional-based NPD New product project Engineering department
Marketing
department

13. Simultaneous NPD per cent of activity per cent of activity 100 100
commercialisation
technical
development
concept
generation
strategic
planning
end
duration of product innovation process
Source: Crawford, 2000

14. NPD as a network of interactions
External inputs:
competitors;
suppliers;
distributors;
customers.
External inputs:
societal needs;
competitors;
supplier partnerships;
distributors;
customers;
strategic alliances.
Marketing and sales
Finance
Accumulation of knowledge
over time
External inputs:
competitors;
suppliers;
distributors;
customers;
university departments.
External inputs:
scientific and
technological
developments;
competitors;
suppliers;
customers;
university departments.
Engineering and
manufacturing
Research and
development

15. Innovation management framework
EXTERNAL INPUTS:
macro factors;
competition; profit; growth; diversification; etc.
Organisation and business strategy
Organisation’s knowledge base accumulates knowledge
over
time
Marketing
EXTERNAL INPUTS:
scientific and technological
development;
competitors;
suppliers;
customers;
university departments.
Research and technology
EXTERNAL INPUTS:
societal needs;
competitors;
supplier partnerships;
distributors;
customers;
strategic alliances.
Source: Trott, 1998

16. References Trott P (2005) Innovation management &
New product development, Prentice hall, 3rd ed., London.
Baker M and Hart S (1989) Product strategy and management,
Harlow, Prentice Hall.
Deschamps J P and Nayak P R (1993) Lessons from product juggernaughts, PRISM, Second Quarter.
Wheelwright S C and Clark K B (1992) Revolutionising Product Development. New York: The Free Press.